'Stunning' Fed move put bottom under stocks: Traders

After a swift and serious selloff, stocks have managed to rise on Thursday's session with help from the soothing words of St. Louis Federal Reserve President James Bullard. And after dropping just shy of 10 percent from high to low, the S&P 500 looks to have finally bottomed out, some traders say.

"Whether the complete correction is over I'm not positive yet, but there looks to be some relative calm," said Jim Iuorio of TJM Institutional Services. "I think the next leg is going to be higher."

Iuorio is focusing on the comments Bullard made Thursday morning on Bloomberg TV, where he discussed the quantitative easing program, which the Fed is currently winding down.

He said, "We have to make sure that inflation expectations remain near our target. And for that reason, I think a reasonable response by the Fed in this situation would be to … pause on the taper at this juncture, and wait until we see how the data shakes out in December."

Bullard's comments come two days after those of San Francisco Fed President John Williams (who, like Bullard, is a non-voting member of the Fed Open Market Committee). Williams told Reuters "If we get a sustained, disinflationary forecast… then I think moving back to additional asset purchases in a situation like that should be something we seriously consider."

The conclusion drawn by many is that, in the words of Rhino Trading Partners chief strategist Michael Block, "the stage is set to put QE back into place, thanks to Bullard's comments today. It's very dovish and very bullish for risky assets and we will treat it accordingly."

Adam Jeffery | CNBC

James Bullard, president of the Federal Reserve St. Louis.

For Iuorio, the timing is striking.

"It's just rhetoric to try to jawbone some calm into the stock market, and to me that's absolutely stunning. Because if you look at the economic picture, there's been nothing to suggest that we're off-track," Iuorio said. "So [Bullard] must be responding to volatility in the stock market and lower prices in the stock market, and just kind of giving us a nod and a wink and saying, 'we have your back.'"

Like Iuorio, Brian Stutland of Equity Armor Investments does think the bounce off of Bullard's words will continue. After a scary slide on Wednesday, the trader believes that the worst is over.

"Basically what you saw was a complete wash-out," said Brian Stutland of Equity Armor Investments. "And I think now, we had a little correction. You have to price-average in if we have any more selloffs in the market."

Still, he adds that in his view, the days of wine and roses are over for stocks.

"I don't think we're going to have these half-percent move like we saw in September. We have some real volatility, and I think that continues into the end of the year," Stutland said. "But I think ultimately, stocks end up a little higher."

Of course, not everyone is buying in just yet. Carter Worth of Sterne Agee, who appeared on "Futures Now" on Tuesday to argue that the correction likely had further to go, told CNBC on Thursday he expects more downside still.

With the S&P 500 near 1,860, Worth wrote in an email: "I'm guessing we're going to see the mid to high 1700s."

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